Small Business

The Best Place for Your Business

Instead of agonizing over competing studies, you need to decide exactly where your particular outfit will prosper. Here's how

When Kevin Oldenburg, co-founder and president of MatriCal, a small pharmaceutical technology development company, was looking for the permanent home for his business in 2001, he first considered Los Angeles, Boston, and New Jersey. But he eventually chose Spokane, Wash., which happened to be the hometown of his co-founder, Dan Roarke. The city had recently named a district in town the Terabyte Triangle, creating office and laboratory space -- and accompanying widespread broadband access to go with it -- designed to attract tech companies like Oldenburg's.

In the end, Oldenburg says he moved his company to Spokane, a small city of about 200,000 people, for the quality of life and low cost of doing business, not for any incentives package the government was offering. "We had the choice of settling where we could be close to our customer base, but we chose Spokane for the proximity to highly-skilled workers from the area universities, the proximity to an airport, and for the low cost of living and operating here," says Oldenburg.

Despite attempts by communities to lure entrepreneurs with incentives, it's often a mix of other factors -- including family ties and the size and geography of a place -- that determines where today's entrepreneurs will ultimately set up shop. Only then do they look at the entrepreneurial climate, which is often subjective and hazy at best.

NARROWING YOUR SEARCH.

So what makes the ideal nest for your particular business? The answer starts with you. Why are you moving in the first place? Are you dissatisfied with your current enterprise, feeling the pull of low-cost rural living, or are you just sick of city life and want to live where you can enjoy the great outdoors? Or perhaps you're opening a business that would thrive in a big city, with a niche market. Now's the time to ponder these lifestyle questions, as the answers will help to narrow your search.

Assuming you're like most entrepreneurs, your motives may be a mix of all of the above. If you're sitting on the next eBay, you may want to hit an entrepreneurial hotspot, like Boulder, Colo., or Austin, Tex. -- or even Silicon Valley. But remember that even though entrepreneurship is a way of life in these places, a high cost of living is, too.

If you want to be an entrepreneur but don't yet have an idea as to what you want to do, consider areas with strong incentive packages. Some places may even have a specific business in mind and will make it worth your while to bring it to them. For instance, if you're thinking of opening a grocery store, consider Louisville, Ky., where entrepreneurs who open a store in a needy area get a forgivable $50,000 loan as part of that city's Corridors Of Opportunity in Louisville (COOL) program.

FINDING CUSTOMERS.

But be sure to completely understand the package a place is offering, since incentives are notoriously difficult to pin down, especially when it comes down to which government agency is responsible for what incentive.

Assuming you know what business you want to start, remember that not every entrepreneurial venture is created equal. The most common small-business categories are manufacturing, service, technology, and retail, and what's essential for one company is just a nice perk for another.

For instance, many tech companies could flourish in a cave in Tibet, as long as their broadband Internet access is dependable. A retail hardware store, on the other hand, may be running on dial-up, but as long as they're on the corner of Main and Maple, they've got a fighting chance at success.

You can't run a business without customers, so you've got to determine who they are and find them. "Whether you're in NYC or a small town in Kansas, you have to get a sense of what types of people live where, where the movie theatres are, what the grocery store is like, and where people go for fun," says Amini Kajunju, the executive director of the Workshop In Business Opportunities (WIBO), a New York-based organization that helps entrepreneurs learn the fundamentals of starting a business.

NET RESOURCES.

If you can't spend an extended period of time in a given place, Kajunju recommends consulting the U.S. Census Bureau’s Web site (census.gov) to get the nitty-gritty on an area. It's key to crunch the numbers on median income, population, and job growth, as well as average age, to get a read on the economic climate of an area. The census site also offers information on ancestry, marital status, and language in its reports on the decennial census.

There are other Web sites and resources well-suited for identifying the best location for your business as well. The Population Reference Bureau (prb.org), offers information about different demographic phenomena. For retail businesses, the Rand McNally Commercial Atlas & Marketing Guide is an annual publication that includes population, income, buying power, and sales data by store type for many otherwise underreported locations in the U.S.

If you don't choose one of the well-known entrepreneurial hotspots, you should be on the lookout for places that offer support for those who decide to go it alone. "You want to go to places where entrepreneurial activities are normal, active, and supported," says Christian Gibbons, the director business/industry affairs for the City of Littleton, Colo.

READINESS FACTORS.

Although a community's level of entrepreneurial friendliness is difficult to measure, there are ways to begin to judge. A bustling city center, full of activity and commerce, is the first indicator of entrepreneurial fertility, and there are additional, more in-depth indicators. Deborah Markley, the managing director and director of research at the RUPRI Center for Rural Entrepreneurship and her team have developed a tool for communities to determine their level of "readiness" (click here to read their report).

Entrepreneurs would do well to look at these "six readiness factors," which include openness to entrepreneurship, existence of supportive programs to promote networking, mentoring, and financing, as well as whether there's a local leadership team committed to building and supporting an entrepreneurship program. Often, in the ready communities, the chamber of commerce and the library will offer significant resources (see BW Online, 05/30/06, "The Library: Next Best Thing to an MBA").

But the surest way to gauge a community's entrepreneurial climate is to ask. "Go talk to the other entrepreneurs there, because that's how you'll get the most candid answers and the most accurate information," says Megan Beeler, the community project director for the Boomtown Institute, an organization aimed at helping small towns build their entrepreneurial potential.

"ECONOMIC GARDENS."

What kinds of support networks are there? Does the community leadership respond when entrepreneurs voice a need? "Entrepreneurs need to look at the ease of starting a business, because that will say a lot about how easy it is to actually be in business," adds Beeler.

Some state and local governments have instituted programs dedicated to making their community friendly to entrepreneurs. Hartwell, Ga., offers a number of specific services to entrepreneurs, including a mentorship program with retired business professionals, as well as close connections with the University of Georgia. "Many people don't know where the resources are, so we provide the resources, then act as a bridge," says Patricia Fritz, executive director of the Hartwell Downtown Development Authority.

Though different places approach promoting entrepreneurship differently, some ideas have really taken hold. "Economic gardening," a practice which originated in Littleton, Colo., provides entrepreneurs with the kinds of resources common within large companies. The City of Littleton has an office that provides tools like Geographic Information Systems (GIS) mapping capability to assess the demographics, focus groups, Web optimization, marketing tools, and competitor intelligence to any business within their borders. "Many of the companies never even knew such tools existed," says Gibbons.

PERSONAL PREFERENCES.

The idea of economic gardening has spread so far in economic development circles that a virtual community of professionals now exists on Littleton's list-serv. Entrepreneurs looking to get the inside scoop on up-and-coming entrepreneur-friendly communities can subscribe and learn from this group of 525 people from more than 15 countries.

"It's still disorganized," says Gibbons, "but if you enter the group and mention starting a business, [the professionals involved] will get right to helping you," he says. Gibbons says "economic gardens" exist all over, including places like San Luis Obispo, San Bernadino, Chico, and Oakland, all in California; as well as Santa Fe, N.M.; the entire state of Wyoming; and Lancaster County, Pa.

Another network of community-development professionals to tap into is the International Economic Development Council (IEDC) (iedconline.org/), which maintains a member directory for subscribers. Just about every economic developer in the nation is listed in that directory, says Beeler. "And every community that lists a member is at least conversant in entrepreneurial matters," she adds.

In the end, you have to go where you want to be. "People start new companies in San Diego all the time. They're willing to pay more because they want to live in San Diego," says Oldenburg. "In Spokane, I've got all the things I want in a city. All the Broadway shows come through here. They may come a year later than they do in New York, but that doesn't bother me." For those who don't mind better late than never, there's a whole world of places that can be your company's landing pad.